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Eleven

   MINISTERS OF FINPOLITY:
   THE UPPER EXECUTIVES

   Top executives of top American corporations are, after the Kremlin rulers, the most anxiously studied and written about small group of persons in the contemporary world of affairs. Each group is more sedulously and continuously scrutinized, in sober truth, than the much larger and far more crucial collection of scientists.

   More numerous than Russian politicos, American upper corporation executives are nevertheless very few. If we take the elite Fortune list we have before us only 500 industrial companies, 50 commercial banks, 50 public utility companies, 50 transportation companies (rail, air, highway and water), 50 life insurance companies and 50 merchandising enterprises--750 in all. This is the cream, with assets ranging from as low as $7.444 million (Needham Packing) to $30.906 billion (AT&T).

   Each of these enterprises glories in a chairman, a president, usually at least one executive vice president, sometimes a comptroller and always a treasurer and a secretary, the three latter rarely involved in policy formation. The array of vice presidents varies by size of enterprise but, no matter how large it is, these men are usually mere divisional or departmental managers, direct instruments of top management but not in top, management themselves.

   So truly imperial is the domain of the largest finpolities such as AT&T, General Motors and Standard Oil that the executive vice-presidential function is often divided among several men, who meet as an executive committee. General Motors in 1964 had three executive vice presidents; Standard Oil of New Jersey, five; but Ford, only one.

   In the ordinary case the top officers are a trio: chairman, president and executive vice president. The president's duties correspond to those of the captain of a ship, are virtually as routinely formalized; and those of the vice president correspond to the ship's executive officer.

   If we allot to big management an average of five men we have 3,750 upper executives. Because some of the larger companies have more than five in top management, it may be that as many as 5,000 should be reckoned. As there are smallish fairly important companies not included in Fortune's compendium, the number of top management people may be as great as 10,000, the number set forth in Business Executives of America, published by the Institute for Research in Biography in 1950. But this total included men in Canadian as well as United States companies.

   Important corporation executives certainly do not exceed 10,000. More probably there are fewer than 5,000, a restricted group. Naturally, if one looks down the entire nondemocratic para-military chain of command to junior executives and foremen, the number of executives is much greater. None of these shapes policy and few ever will. They are cogs of the order of middle-range Soviet commissars and lower bureaucrats. The system is indeed very much like the Soviet's, which was modeled after it.

   Corporations generally are run by the executive vice president (or vice presidents), the president usually supervising and intervening directly only when he feels it advisable. In newer, reorganized or problematic companies the president, it is true, may be a dynamo of activity. The chairman is available for consultation on nice points of policy; only rarely if ever, one gathers, does he tell the president, unbidden, what he ought to be doing.

   Within the bounds of determined policy and the nature of the business the president is a complete autocrat. Such being the case he usually acts with great restraint, like a jet pilot who knows that the slightest touch on the rudder may cause a wide deflection of course.

   The chairman comes into fullest bloom at meetings of the directors, over whom he presides. These are held quarterly or semi-annually; and are mostly routine affairs. Top officers are directors, and one may ascertain who is and who is not in top management by noticing whether he is or is not a director as well as an officer, a point in elementary corporatology.

   The chairman, president and executive vice presidents are invariably directors; the vice presidents sometimes are. In Ford and Standard Oil of New Jersey some vice presidents are; in General Motors at present only executive vice presidents are.

   Apart from company officers, directors usually consist of officers of other friendly companies or friendly banks, of lawyers, sometimes foundation officers and college presidents, former officers and large stockholders (sometimes themselves former officers). Directors who actively question or suggest are usually owners or representatives of large blocks of stock or senior obligations. In most cases the outside members are passive, merely listening and taking note of what is reported by the executives. They evaluate what they hear in terms of their own business experience.

   Except where forbidden by law, as in the case of banks, directors are usually cogs in widespread interlocks, a phenomenon abhorrent down through the years to many congressmen. Congressmen who dislike this practice of interlocking directors--that is, a few directors from a cluster of key companies spread around among a large number of satellite companies--would like it forbidden on the ground that it signals central moneybund or "Wall Street" control. They would prefer that a man be a director of only one company at a time, thereby bringing in many "unsound" outsiders.

   My own objection to forbidding interlocking directors is that it would be ineffective in breaking the true interlock, which exists by prior dispensation in a small ownership coterie through blood relationships, intermarriages, private school associations and club memberships. We must not forget that the entire corporate situation directly concerns no more than 2/10ths of 1 per cent of the adult population (fewer than 200,000 people); with some 8/10ths of 1 per cent less involved; and never more than 10 per cent even infinitesimally involved except as rank-and-file employees and consumers. Abolishing corporate interlocks would not alter any basic situation, would at most provide only one more futile pseudo-reform. If it led anyone to believe some basic change had taken place, it would be grossly deceptive.

   Those who oppose interlocking directorates, if they were seriously consistent in their recommendation, should call for the outlawing of intermarriage, hereditary trust funds, common schooling and common metropolitan club membership among large property holders and corporate families. One could isolate each one, incommunicado, in a private telephone booth.

   Except where they represent large blocks of stock or are officers of the company, directors are seldom vital to the conduct of affairs--serve mostly as window dressing. There is a school of corporate thought that contends directors should direct; but this is a minority view. Directors generally do not direct unless they are also big stockholders or officers; as outsiders they usually don't know enough about the specific situation. Even the notion that some bring to bear an indispensable broad-gauged public point of view, valuable in preserving the corporate image as a benign entity, won't hold water because efficient public relations departments tend to this simple detail. A few directors, in fact, are invited on boards solely because they are witty or eccentrically knowledgeable fellows, thus tending to perk up otherwise dull meetings of essentially stodgy men.

   In crises directors may be collectively called up to tap their general business experience. Some internal dispute over fundamental policy may be submitted to them, in which case they function as a board of judges. If they cannot resolve the dispute it will be resolved at the next meeting of stockholders, where the big shareholders will assert themselves. But such an occurrence is rare because among the directors it is known who speaks for large stockholdings. It is known where the ultimate power lies.

   Despite all the devotion to voting in corporations, the process is hardly democratic because the vote, in any showdown, is by shares of stock, not by individuals. All the thousands of rag-tag stockholders in the Ford Motor Company could not outvote the Ford family. The situation is absolutely or effectively the same in every company, which means that a very large and paramountly vital part of internal American affairs is under essentially autocratic rule, as in Russia. At variance with democratic ideology this statement surely is but nevertheless, alas, it is true, true, true.

   As long as matters progress smoothly, as they ordinarily do, the point of view of the managing officers prevails at board meetings. Organizational trouble appears only if a very large stockholder, or someone speaking for large blocks of stock, seriously opposes the management.

   While newspapers report from time to time on internal struggles for company control, such reports rarely involve the biggest companies. Control is seldom an issue in the big smoothly running enterprise. Whenever it is, the issue is quickly resolved, either by internal vote or by court decision.

   Corporation officers are of interest in this inquiry mainly because they are the front-line deputies of the rich and the super-rich when they are not themselves of the rich. They are the watchdogs and overseers (usually hired) of great wealth. As such, their earned take-home pay is rivaled only by that of persons in the sports and entertainment worlds who become tremendous box office attractions--home-run hitters, knock-out punchers or seducers-seductresses of the screen. Because only a handful of these fireflies maintain their box office charisma for any considerable time, as a group they are not in the income class of the executives, who even in retirement continue to be handsomely rewarded. Entertainers and athletes in general are paid little.

   Just what is it that makes an upper corporation executive worth his pay, ranging on the record from $200,000 to $800,000 a year in the merely cash portions? A standard answer, part of what I shall hereafter refer to as the executive mystique, is that "the value of an upper-echelon executive lies in the decisions he makes and influences." ¹

   It is made evident that the decisions for which he is rewarded so handsomely are money-making decisions. While he may at times make wrong decisions, most of his decisions (at least the big ones) must be the right ones, the winning ones. Or so it is argued.

   One cannot deny that the top executives are decision makers. But this observation is not very profound because, paradoxically, not to make any decision is a decision. We are all, as it happens, decision makers. But we are not--most of us--money-making decision makers.

   The kind of decision making the big executive engages in, according to theory, is as follows:

   He makes one big decision (or a series of decisions) that vastly improves the relative position of his company, reflected in earnings; that slightly improves or holds steady the relative position of his company among rivals; that in any general economic decline leads his company to lose ground less rapidly than others; or that enables his company, at the bottom of a slump, to spring up again, phoenix-like, and astonish the world--or at least the editors of Fortune and the Wall Street Journal.

   More exactly, he is not supposed to make those decisions by himself, out of the whole cloth, but to fit together the advice and insights of many others, like a master craftsman, and extract the winning decision.

   In theory the decisions he makes must be winning decisions. Because if one is paying for decision making, as the big stockholders are supposed to be doing, one surely does not want to pay for losing decisions. And yet, highly paid executives often make momentous losing decisions, sometimes all together, sometimes in industry groups and sometimes in single companies.

   In the early 1930's, the leading corporate executives all made a collectively losing decision. They decided to maintain their economic positions amid sudden price declines through cost-cutting, mainly by wholesale discharges of unprotected workers, the rank-and-file patriots. The theory was that as demand for goods was restimulated at lower price levels, business would pick up at more normalized levels than in the 1920's, workers could be rehired at lower wages as in the slump of 1920-22. Then the process of money-making could resume on a "sounder" basis.

   There was no pick-up, however, because during the serial process of wholesale layoffs workers exhausted their meager savings and credit.

   When prices reached low levels they continued to fall to still lower levels, except where they were "administered." Much less business was done because many people had no money. The economy began stagnating, the Communists gloated because Marx had predicted capitalism would lose the ability to govern in one of these slumps. The Great Depression was on, produced by master minds who instead of living up to their reputation as entrepreneurs had become, turtle-like, solely interested in preserving working capital.

   Ironically, surrounding conditions from a business point of view were perfect. There was no government interference with business. There had been twelve years of uninterrupted lax Republican rule under figurehead presidents. Taxes under Treasury Secretary Andrew Mellon had been brought to very low levels. Tariff walls against odious foreign goods were at record high levels. Big Business ruled the roost more fully than it did later under Lyndon B. Johnson.

   If it were a fact that executives are paid as decision makers they would all have been fired. For they had all, acting according to crowd psychology as they usually do, made a general losing decision, reflected in steady corporate deficits. There never was a major winning decision in this situation in the sense of one company moving ahead of others. No corporate master mind showed himself, for the simple reason that there were no corporate master minds. The emperors were all stark naked. In national self-defense the government moved, slowly, to intervene with its own programs, amid witless cries from the corporate press of "creeping socialism."

   One often sees the same sort of collective losing decision making in an entire industry, as in the railroad industry since World War I. Suddenly faced with new competition--from pipelines, trucks, buses and airplanes--the railroad industry down through the decades, instead of adjusting services to meet new conditions, instead of participating by one avenue or the other in new forms of transport, decided to curtail services. The industry decided, forsooth, to go out of business on the installment plan.

   Where one company clearly falls behind all others in the same industry through having failed to adapt to new currents or to take advantage of some innovation, it is obvious that the chief executive (or his subalterns) has not been alert and he is, unless he is a big stockholder, usually dropped. This was the case with respect to Charles Luckman, president of Lever Brothers after World War II and widely touted as a "wonder boy." The rest of the industry stole a march on him in the introduction of detergents in place of soap powders, and Lever Brothers underwent setbacks in the market until it tardily took up detergents. Luckman was fired.

   But when Ford Motor Company lost a reported $250 million on its hapless Edsel model in the 1950's, Henry Ford II did not walk the plank. He, along with other stockholders, simply took it in the pocketbook. He could not be fired because be was a chief owner. This simple fact revealed the source of true power in an executive.

   Aging Sewell Avery, a big stockholder, stubbornly held to his position at the head of Montgomery Ward and Company after World War II and decided to retrench in expectation of a resumption of the depression. Ward's arch-rival, Sears, Roebuck and Company, decided to expand in expectation of an inflationary boom, and soon passed on to astronomic heights of latter-day success. Here we have a case of a losing and a winning decision, both made by experienced managements, one rather inflexible. To argue that Avery was a poor executive because he made a less advantageous decision is like arguing that Napoleon was a bad general because he lost the battle of Waterloo.

   In all the loose talk about executive decision making it is overlooked that corporate decisions are usually made collectively, more recently on the basis of a vast mass of information assembled and digested by computers. After careful sifting by low-paid technicians--statisticians, economists, mathematicians, psychologists and even at times anthropologists--a set of alternatives is laid before the executive board. If the correct data have been fed to the computers these mechanisms may themselves have the answer: Expand, branch out, retrench, stand pat, fight, submit, deny. Again, the decisions are rarely of life-and-death caliber. They are usually fairly routine and marginal.

   John F. Kennedy, it is reported, faced divided counsels among his advisers on the religious issue in 1960. Some said he should avoid it, some said he should stress it, others felt he should touch on it, but lightly. The problem was put to a computer into which a mass of data was fed on the characteristics of the American population. The computer replied: Stress the issue. And this was done. While one cannot say that this is why Kennedy won, it obviously did not cause him to lose. So it was presumably the right decision-made by a computer. The masterly decision in this case was evidently to turn to the computer.

   Corporation officials often face issues that arise from a set of losing decisions of long- or short-term nature. And they know they are losers. What they often do then is to make no decision, ride with the tide in the hope that something of a saving nature will turn up. They are not, then, paid primarily to make dramatic "right" decisions, although they participate in corporate serendipity and will be penalized for obviously bizarre judgments, now increasingly eliminated by expert analysts and computer technology. But corporations, their nets spread wide, are not run by ear, as the decision-making theory suggests. If they sometimes gamble, it is only in small ways. Almost never do they stake their lives on a single line of policy. They do indeed have alternative policies, sometimes all in effect in different areas at the same time. They play both ends against the middle and the middle against both ends.

   There is much else, which need not detain us, to show there is little in this contention that high compensation is given for profitable decision-making. The decision-making theory is part of the executive mystique. This mystique, dubbed "Management," has been developed partly for psychological reasons: To give executives in a long chain of command down to the newest junior executive and foreman a sense of worth in essentially boring jobs. It also provides an impressive rationale for the payment of grotesque salaries. For as decision makers, most company chairmen and presidents could not fight their way out of a paper bag, as is repeatedly shown when they are dragged into full public view and subjected to searching questioning under subpoena. Then they almost invariably wilt, show themselves as very ordinary men.

   This is not to say that corporation executives are without ability. They are able people, the ablest that can be found for the task. Their ability resides in a varying combination of qualities. The big factor that enters into their selection and compensation is that they are custodian-trustees and overseers of vastly valuable properties. As they are agents of often absentee large owners, and are sometimes caught in tight situations where one decision is as bad as another or is a Hobson's choice, their pay is in part an inducement to guarantee loyalty at the beginning of a chain of command. Below the top, loyalty can be enforced by sanctions. But the initiator in the chain of command has a wider sphere of action.

   Owing to their strategic position at the head of complex properties the top executives are in excellent positions for self-enrichment. They bold the combination to the office safe, know many inner company secrets. They are exactly in the positions of Rockefeller and Carnegie with their early enterprises, except that they are not the chief owners. (They usually own very little of the company.) But, as corporate history shows, they are in a prime position to help themselves to goodies at the expense of the company and its stockholders. Many have done so, a few from time to time are still caught in the act.

   Though partly a crowning reward for long service in a variety of lower positions throughout the company, their compensation is mainly, a shield against the temptation of helping themselves at the company's expense. Such temptations are guarded against in many technical ways, as by outside audits and analyses, but the basic way is to make it always evident that a sure and comparatively high earned income awaits the man who avoids the dark risks of high adventure at the company's expense.

   That astronomic executive compensation has nothing whatever to do with decision making or competitive wizardry is proved by the fact that executive compensation in the noncompetitive electric utility industry is as high as, often higher than, in straining, striving industrial companies. Copious figures on the compensation drawn by executives in these utility sinecures, which could easily be filled by bright collegians, are presented for twenty pages by Senator Lee Metcalf of Montana in his Overcharge (David McKay Company, N.Y., 1967), a study of fancy financial capers by the entire contemporary electric utility industry.

   There is even more to the need for high compensation. As the company wants the top executive's undivided attention, it wants him to feel free of all the nagging worries that beset other men. As far as these problems can be met by money--big life insurance, schooling for the children, residence in soothing surroundings, a contented wife--they are met in the compensation awarded. Problems that cannot be solved by money, such as problematic wives, will cause a likely prospect to be passed over because the company cannot afford to have its affairs in the hands of a brooding man. Much has been made of the fact that an alcoholic or socially withdrawn wife will cause a man to lose the nod of advancement. But anything at all bizarre or worrisome about the wife will have the same result. It is not minded if she is a big spender, but if she overspends or in any way shows she is out of control, she will certainly jeopardize his chance. Indeed, any member of the family far out of control and thus the object of worry to the man will count heavily against his selection for a top position.

   Hence the high salaries, elaborate fringe benefits and deference in the corporate press to ostensibly brilliant decision makers.

   The hired top corporation man, then, as distinguished from the hereditary owner-executive, is much like the cormorant or fishing bird, still used in China. A strap is fastened around the birds neck, permitting him to breathe but not allowing him to swallow his catch. He dutifully brings the fish back to the boat. Now and again (paydays) the strap is loosened and he is allowed to swallow a fish. The bird is a percentage participant in the process, which was established by and for others. ²

   It is part of the corporation mystique that the corporation executive is inherently a powerful person--that he freely and autonomously extemporizes. But if such ability were either extensive or crucial it would be easy to shift top officials out of industries where the average net return on capital was high, such as automobiles, cosmetics or pharmaceuticals, into industries where it was low, such as coal, railroads or steamships. The wizard decision makers would then be able to make decisions that would move the lagging enterprise far above the traditional rate of return for the industry.

   This is not done. Executives are not attracted from booming industries to lagging ones, from whaling and pearling to sponge fishing. When an industry hits the skids all the enterprises in it go down, some perhaps faster and further than others. No amount of experienced executive decision making in a single company is able to arrest the process.

   There is in fact no consistent relationship between high executive pay and company success. Even in a company on a downhill course, paying no dividends, executives may be paid better than in more profitable companies. Thus for years Bethlehem Steel, although paying no dividends and running at deficits, paid Eugene P. Grace as president up to $800,000 a year, a record as of 1956 in cash emoluments. Somebody, including himself, apparently wanted Mr. Grace in charge of the properties.

   That the British take a somewhat jaundiced view of inordinately high executive salaries was shown recently by the case of Wilfred Harvey, sixty-seven-year-old, $750,000-a-year chairman of the British Printing Corporation. Four fellow directors forced his resignation on the ground that his salary scale was "grotesque and ridiculous." He also had a special expense account. The annual earnings of the company were those of General Motors for a single day. So exercised did the British become that acidulous editorials were written and questions were asked in Parliament. ³

   The chief executives of the big companies, in addition to directing internal affairs, also represent the company vis-a-vis the world, government, labor unions and the general public. Their role is, basically, that of politicians and diplomats. As shrewd politicians some, irrespective of the prosperity of the company, are able to make a better deal for themselves than others among the various factors of major owners, small stockholders, government officials, labor leaders, banks and customers. Some are where they are because they are married to a daughter of the chief stockholder or the daughter of the banker that holds the company's notes. They may, indeed, just be a friend of the bank, which is interested only in its notes, not in record earnings.

   Henry Ford II, aged twenty-five, was not spirited out of the Navy in 1943 to become vice president of Ford Motor (executive vice president the next year) because he was considered a wizard decision maker. He had failed to graduate with his class of 1940 at Yale, couldn't make the grade. Nor, years before, was his father Edsel at age twenty-six made a vice president because of any then evident great decision-making ability. Henry Ford, when he appointed Edsel, told newspapermen it showed what a remarkable country the United States was that so young a man could achieve such a high post so early. On this score Bourbon France was a far more remarkable country, for Louis XIV became king at age five.

   That the top corporation executive is a person of commanding power in his own right is part of the executive mystique and is uncritically incorporated into his theory of the power elite by C. Wright Mills, the American sociologist. As originally argued by the Italian sociologist, Vilfredo Pareto, in every branch of human activity people can be given an index number on a scale. To those with the largest accumulated indices of achievements or specific qualities, in whatever category, he gave the name of elite. There is, obviously, an elite for every function and quality: barbers, violinists, scientists, bankers, seductive women, politicians.

   People, too, possess powers, from zero to 100, in asserting themselves over large areas of affairs. Those able to assert their wills, thus affecting many others, perhaps even against their wills, are said to have power. And, paraphrasing Pareto, Mills said that those with the most such power are to be regarded as a Power Elite. Where Mills becomes original, or quasi-original, is in his description of what purports to be the more recent American power elite. He constantly uses the words "new" and "today," so that the situation as it stands is evidently something freshly perceived by Mills.

   Although the corporate rich or big owners belong to the elite of Mills, be says their role has been reduced in phases--first by big politicians as in the New Deal and more recently by generals, admirals and corporate officials of the Warfare State. ⁴ The big rich are being phased out or down and are being replaced by executive types, either military or civilian. If Mills is correct, the message of these pages is somewhat passé.

   The inner core of the power elite consists, first, of those who interchange commanding roles at the top of one dominant institutional order with those in another: the admiral who is also a banker and a lawyer and who heads up an important federal commission; the corporation executive whose company was one of the two or three leading war materiel producers who is now Secretary of Defense; the wartime general who dons civilian clothes to sit on the political directorate and then becomes a member of the board of directors of a leading economic corporation. . . .

   The inner core of the power elite also includes men of the higher legal and financial type from the great law factories and investment firms, who are almost professional go-betweens of economic, political and military affairs, and who thus act to unify the power elite. The corporation lawyer and the investment banker perform the functions of the "go-between" effectively and powerfully. . . .

   The outermost fringes of the power elite--which change more than its core--consist of "'those who count" even though they may not be "in" on given decisions of consequence nor in their career move between the hierarchies. Each member of the power elite need not be a man who personally decides every decision that is to be ascribed to the power elite. Each member, in the decisions he does make, takes the others seriously into account. They not only make decisions in the several major areas of war and peace; they are the men who, in decisions in which they take no direct part, are taken into decisive account by those who are directly in charge.

   On the fringes and below them, somewhat to the side of the lower echelons, the power elite fades off into the middle levels of power, into the rank and file of Congress, the pressure groups that are not vested in the power elite itself, as well as a multiplicity of regional and state and local interests. If all the men on the middle levels are not among those who count, they sometimes must be taken into account, handled, cajoled, broken or raised to higher circles. ⁵

   There has in fact been accomplished a Managerial Revolution, Mills implies. Power in the United States has insensibly shifted from the owners to the managers, from property to technical function (Berle-Means, James Burnham, J. K. Galbraith). Here be echoes a long line of modem writers increasingly emboldened in what they assert. ⁶

   According to Mills, within the new managerial grouping, power is in the flux of coalition among managers. It follows that if the Fords, Mellons, Rockefellers, Du Ponts and others still count, they count for much less than they once did. If money once talked, now it only whispers in the halls of power, hushed by the presence of the organization man.

   The major new segment in the managerial group, according to Mills, consists of "the warlords," the military. Owing to the emergence of a big cold-war military establishment and the infusion of corporations with hundreds of retired officers (who were really available because 13.5 million men were mobilized for World War II), the military establishment has become an independent political segment, Mills contends. War and peace are dictated, not in Wall Street as socialists and populists used to claim, not in Congress and the White House as formal constitutionalists believe, not in the populace as naive democrats believe, but in the Pentagon. The Joint Chiefs of Staff, professionals, have the determining voice in this matter and Rockefellers, Mellons, Du Ponts et al. must just tag along.

   Although the situation as projected by Mills creates a complicated and dramatic picture, one must object to it on compelling grounds. Mills has raised what are clearly subordinate advisers and technicians into his elite of power. Many of the persons he mentions as power wielders are known, in Wall Street and Washington, as "office boys," "fat boys," court jesters and errand boys. Even by categories they do not rate. Lawyers and bankers, as such, do not rate. The point is: Whose lawyer or banker are they?

   Mills's classification was purely subjective, externally applied. Most of the members of his elite are subject to the decisive will of others. They do not have a wide range of power in their own right, as do Communist leaders, but derive it. They are but the representatives of power, held in reserve by others. Yet Mills claims that "the higher agents" of the economic, political and military domains "now often have a noticeable degree of autonomy" and "that only in the often intricate ways of coalition do they make up and carry through the most important decisions." ⁷ He asserts in effect that if the Pentagon says "No" to Wall Street and the White House there ensues at least an internal power crisis.

   As to this, it can be shown that on "important decisions," such as the discontinuance of manned bombers as well as on other matters, the joint Chiefs have been flatly, pointedly and publicly overruled amid cries of anguish from friends of the bomber program in Congress. The present weakness of manned airpower has been dramatically shown in Vietnam, where American plane losses against a minor foe have been staggering.

   A salient fact about any elite is that it is not only a classifiable entity but it really has what it is supposed to have. The elite heavyweight punchers can really outpunch other men. All the orchestral conductors in the world, in meeting duly assembled, could not vote Leonard Bernstein out of the category of elite conductors. This is because Bernstein has all the characteristics stipulated for an elite conductor. One might meaningfully say, "I don't like Bernstein's conducting"; but one could not meaningfully say, "Bernstein is not an elite conductor."

   And this is particularly so of anyone in a power elite. If someone can say of anyone in a supposed power elite, "You no longer have power," and this statement is true, did the object of the remark really have power?

   But most of the members in Mills's power elite are readily removable, or may be ignored, by other members. Most of the members of Mills's power elite are indeed no more than advisers and technicians. They were hired and can be fired, hold their positions only during satisfactory conduct. This is not to say that while in office they are not powerful. But their power is derived power, not their own, not autonomous.

   All of Mills's military officers, first, are subject to retirement under pre-existing rules. Moreover they can all be retired early. None of them can say, "I don't believe I shall retire just yet." Furthermore, none of them made the rules.

   Again, each can be ordered to change his command, his driving will thwarted. In a salient case President Truman relieved General Douglas MacArthur of the Far Eastern command. MacArthur did not want to be relieved. But when all the chips were down, he was powerless. The same goes for the Joint Chiefs. In speaking of the autonomous power of the American military, Mills sounds as though he were speaking of the German and French officer corps of an earlier day, when a faction of landed (propertied) army families actually had deputies sitting in the legislature. The General Staff was a legislative force, could unseat ministers. The United States has no such independent politically ensconced officer corps and it is misleading to imply it. In the United States, generals (even loud talkers like Curtis E. Le May and George Patton) can be moved around like pieces on a chessboard.

   Corporation officials, similarly, are retired on schedule and are always dismissible at the behest of the large blocks of stock. While they may be powerful, it is not their own power on behalf of which they speak. It is derived power.

   In all of Mills's collection of power-elite people, only the big owners (the finpols) and the upper pubpols cannot be dismissed. Here and there, too, some underling is established through the dialectic of intrigue, usually in a limited way. Members of the Supreme Court are ensconced for life, collectively have ultimate power in the area of interpreting the laws; they can void statutes, can precipitate an inner nationwide power crisis (as with the school desegregation and state legislative redistricting decisions). The president has full executive power, but only for a limited term; all appointed national officials are subject to his whim. Congressmen each wield fractional power for formally limited terms. Only a very few of these in the Senate have some national stature based on inner rank or on constituencies they have attracted outside their home states. Those in office for many terms from noncompetitive electoral districts come, on the basis of deals and understandings with each other, to constitute a powerful inner directorate. In combination this directorate can easily frustrate newcomers. They are the "old boys" in the school, know where all the jam pots are hidden. They are the "power elite" in each, house. Collectively, they "run" Congress. State governors, legislators and judges are clearly second-rank figures: they may be secure, but in very limited areas.

   The upper hierarchy of the Catholic Church, too, owing to its psychic hold on many voting church members, should be considered pretty much as high-ranking pubpols, between the first and second ranks. It consists of churchpols. This is the end of the power elite as far as pubpolity alone is concerned.

   Two people of a type not here included who fit into Mills's conception of the power elite are Secretary of State Dean Rusk and former Secretary of Defense Robert McNamara, respectively derived from the Rockefeller and Ford stables. These men meet all the Millsian criteria and I wouldn't suggest that they should be regarded as ciphers. It is, however, noteworthy that each significantly changed his tune if not his entire public personality in the transition from service under President John F. Kennedy to service under President Lyndon B. Johnson. Each, indeed, changed from ostensibly reasonable and moderate men to fire-eating hawks, from cosmopolitan men to provincial men. In each case, it is obvious, their public script was supplied by the president, who held the power of dismissal over both. Each, no doubt powerful as a go-between, was powerful only as an underling.

   J. William Fulbright, Richard B. Russell, John C. Stennis and others of the Senate Directorate in the interim experienced no such change of attitude. They remained implacably themselves.

   There has in fact been no such phased change since 1930 as Mills and others refer to, although there have been changes--mostly in the way of more intense concentration of wealth with some greater preemption of roles by pubpols. Pubpols and finpols have both enhanced their powers, not with respect to each other but with respect to the public. One of the hundreds of external evidences of this is the shift of the major tax burden to the lower labor force. But these changes have not been basic changes that have altered the structuring of power in the United States.

   What is the case is that American society has grown very large and complex and requires a more complex hierarchy of managers and officials with delegated powers. But to ascribe autonomous, initiating power to this hierarchy, as though it or any member of it below the very top could initiate or veto policy, is to befog the picture. The decisive power is at the very top, as was shown by the futile outcry of almost the entire intellectual and academic community against President Johnson's ruinous Vietnam policy. This policy was given the endorsement of leading pubpols and of big owners and corporation officials. And this was, for those with a stomach for it, a demonstration of power.

   Let us look at a few recent big decisions of history and ask ourselves what role the Millsian power elite played in them.

   In 1940 the facts of atomic theory were put to President Roosevelt. It seemed possible to develop an atomic bomb, Hitler might do it. Beyond scientists (not in Mills's power elite) telling the president of the technical possibilities, what elite led to the decision to go ahead with the Manhattan Project? None, as far as the record shows. If it had proved a costly failure who, besides the president, could have been blamed?

   When it came to dropping the bomb on Japan, who was consulted on the pros and cons? Only President Truman figured in the decision to do it. The dropping of the bomb, like its manufacture, came as a surprise even to the corporate press. Similarly, who joined in the decision to oust General MacArthur? Only President Truman. As the saying goes, he wasn't asking anybody, he was telling them. This is, clearly, demonstrated power.

   During the Cuban missile crisis many advisory voices counseled President Kennedy: Invade Cuba, bomb it, blockade it, go to the United Nations, consult foreign governments, ignore the whole business, stick to economic blockades. Most suggestions, it is clear, were ignored. One course of action was selected--by President Kennedy.

   The Bay of Pigs operation, however, appears to have been a true Millsian power-elite decision (Pentagon and CIA) which the president doubtfully accepted, with a crucial modification (withdrawal of air support) that in effect scuttled the whole thing.

   When it came to committing American military power openly in Vietnam in 1965 the whole idea, as far as the record shows, arose in the mind of President Johnson, who appeared to believe he could pull off an easy coup, a grandstand play that would show him a political wizard. As far as the record shows, no combined group such as Mills talks about recommended any such action, and the president in the campaign of 1964 had explicitly opposed militant action as recommended by Barry Goldwater. Key Democrats of the inner Senate Establishment, such as, Richard B. Russell of Georgia and John C. Stennis of Mississippi (elite of the elite as far as inner political power is concerned), were opposed to the procedure. Yet the president, and the president alone, gave the fateful signal that put the United States on the course toward blundering and costly slaughter and the loss of valuable friends all around the world. The operation, indeed, put the United States on all fours with Soviet Russia in its brutal suppression of the Hungarian uprising of 1956, stripped from the United States all pretensions to humane superiority over what is described on every hand as a sinister totalitarian power.

   In all of Mills's collection of alleged power elite people only the big owners (what I have called the finpols) and the upper pubpols cannot be questioned, and they never were in question. While the big owners can be proceeded against with much hue and cry, investigated, chivvied, demagogically denounced or even fined, they cannot be knocked out short of revolutionary change; for their position is woven into the very warp and woof of the legal system. The upper pubpols can at most be gradually undermined in a series of electoral defeats. Even in defeat the pubpols often still have much power, like mortally wounded pythons.

   This being ineluctably so, the situation is precisely where it was before Mills introduced his dazzling army of underlings. Necessary instruments of it, they are not members of the power elite although in the ruling class; they are its fringes, at most its dispensable advisers. Whatever power they have is by appointment unless they become big owners, which they may do by marriage, or win big elections. Nelson A. Rockefeller, Robert F. Kennedy, Edward Kennedy, W. Averell Harriman and a few others hold elite rank on both counts.

   Members of the topmost elite are not answerable to anyone for what they do in the ordinary course of affairs. This condition eliminates the pubpols, who are ultimately answerable to the electorate and to peers. The pubpols, for example, must spend a good part of their time conspicuously entering and leaving churches; the finpols can take the churches or leave them alone, as they usually do. Nelson A. Rockefeller no doubt diminished his standing as a pubpol by his divorce and remarriage; he did not diminish himself a bit as a finpol. Nor did Henry Ford II diminish himself as a finpol by divorce and remarriage. He even weathered automatic excommunication from the Catholic Church, which a pubpol could not have done.

   A finpol may be an alcoholic, a drug addict or a homosexual; a pubpol would hardly have those choices. A sybaritic finpol can swing elections; his checks are as good as those written by a puritan. A known sybaritic pubpol could not make it. The finpol, in short, has a surer and more generalized power base: money.

   Finpols spend much of their time abroad, often maintain foreign residences--palazzos, ranches, plantations, haciendas, latifundias and even resort hotels. Pubpols must remain close to the home soil, with an occasional junket abroad on "fact-finding" trips. They can't even be seen at Las Vegas.

   Finpols, with no dilution of their essential power, can also lead la dolce vita fully orchestrated, with a full entourage of Corybantic girls. Tendencies in this direction have been moderated of late amid tightening world tensions, as a slight concession to public sensibilities. But jollification continues here and there--in Rome, Marrakech, Monaco, Rio and St. Moritz--behind closed doors.

   Best of all, the finpol cannot be toppled by elections. If one party loses out he has many pubpol friends in the other party. As long as the factories are running he is right in the swim. Reforms come and go; trimming in the back committee rooms goes on forever.

   As a finpol one obviously has a surer footing.

   The difference with Mills on the structure of the power elite and other details mentioned earlier does not mean that his book is without merit: Mills wrote as a moralist and a political analyst rather than as a sociologist. As a sociologist he was unable to make contact with readily available data, he did not have the underlying facts. Yet Mills, despite much shuffling with ranks and cadres of underlings, always and despite everything comes around to the paramountcy of money in the situation. He is especially mordant in his final chapter, "The Higher Immorality," where he writes:

   Whenever the standards of the moneyed life prevail, the man with money, no matter how he got it, will eventually be respected. A million dollars, it is said, covers a multitude of sins. It is not only that men want money; it is that their very standards are pecuniary. In a society in which the money-maker has had no serious rival for repute and honor, the word "practical" comes to mean useful for private gain, and "common sense," the sense to get ahead financially. The pursuit of the moneyed life is the commanding value, in relation to which the influence of other values has declined, so men easily become morally ruthless in the pursuit of easy money and fast estate-building.

   A great deal of American corruption--although not all of it--is simply a part of the old effort to get rich and then become richer. But today the context in which the old drive must operate has changed. When both economic and political institutions were small and scattered--as in the simpler models of classical economics and Jeffersonian democracy--no man had it in his power to bestow or to receive great favors. But when political institutions and economic opportunities are at once concentrated and linked, then public office can be used for private gain. ⁸

   Just as one cannot be sure how much a man is worth by ascertaining how much stock he owns directly, so one can tell little about the true compensation of a top corporation executive by ascertaining what his salary is. It is pointless to mention specific formal salaries. There was a time when a corporation executive kept all of his generous salary. But with the introduction of the graduated income tax, cash income was eroded.

   The tax laws seriously undermined the objective of purchasing the loyalty of worry-free essentially pecuniary men, and ways had to be found to make up the difference. Cash bonuses would not do because these required that the corporation expend (as the laws stood up to 1964) $100,000 for every additional $10,000 that found its way into the executive's pocket.

   The two thoroughly sound ways that were found to avoid this contre-temps turned out to be cut-rate stock options, a concealed untaxed gift, and lavish expense accounts. These latter have more recently been delicately trimmed, but the stock-option plan is flourishing as never before. ⁹

   The effect of the stock-option plan on executive take-home pay, assuming a doubling in value of the stock spread annually over a decade, was as follows in one company under the law as it stood in 1961: ¹⁰

  Total Cash    Estimated   Capital Gain    After-Tax Income
 Compensation   after-Tax    after Taxes   Plus Capital Gain
                Income on     on Options    as Percentage
                  Cash         per Year        of Cash
                                             Compensation

  $240,000      $72,000       $144,000            90
   150,000       59,000         79,000            92
    95,000       46,000         43,000            93
    65,000       37,000         26,000            97
    45,000       29,000         14,000            96
    30,000       21,000          5,400            85

   The effective yearly executive tax in this company ranged, then, from 3 to 15 per cent, or less than the rate applicable to the lowest taxed ordinary income receiver in the country. The pecuniary advantages, direct and sub rosa, of being an upper executive are obvious.

   We need not detain ourselves by reviewing untaxed expense account money, applied to some extent to entertainment and diversion and otherwise simply pocketed, or to other perquisites in the way of retirement funds and investment tips handed around among insiders on the top corporate level.

   Depending on the extent of the stock-option plan and the nature of the company, this new wrinkle turned out to be the new royal road to riches in some companies. In pioneering General Motors, as we have noticed, it converted a long string of successive top executives into multi-millionaires: Raskob, Sloan, Knudsen, Mott, et al.

   Stock options dilute the equities of stockholders--that is, outstanding stock is insensibly reduced in book value as blocks of stock are parceled out at cut rates. Until limitations were imposed outright, stock bonuses were popular, and in these the dilution was more plainly evident. The question now is: Do the stockholders, particularly the large stockholders, know what is taking place?

   Leading stockholders always know precisely what is taking place, want to whet the acquisitive appetite of eager-beaver officers. In General Motors the Du Ponts, with a 23 per cent stake, obviously knew what was going on, acquiesced in it and possibly planned it that way. In at least one case some General Motors stockholders objected and terminated a then existing plan in court. In other companies stockholders are not at first aware of what is taking place and, when some do become aware, they may go to court to have the plans struck down, as in the 1930's in American Tobacco and Bethlehem Steel among others. In those cases a largely nonowning management had set up the plans as a way of subtly obtaining enlarged ownership of the company at bargain-counter prices.

   Where some of the large hereditary owners, as in IBM among others, are executives and therefore participants in a stock-option plan, they experience less dilution of equity. The equity of the stock they already hold, true enough, is diluted but the dilution is partly or wholly compensated for by the participation in the juicy options.

   It is evident from the various schemes of corporate executive compensation that the acquisition of property and more property appears to be the overriding goal. One so concludes upon considering the large formal salaries, stock bonuses, stock-option plans, generous expense accounts and lucrative retirement plans, without considering various fringe benefits: long vacations, medical services, college scholarships and the like. This is all, very plainly, Easy Street in the latter-day corporate era.

   And yet it has been seriously suggested that corporation executives are not really interested in money and money-making. We shall come to more items in this black-is-white mythology later, but right here seems a good place to attend to the notion that executives are not interested in making money.

   1. The line, echoed in many management utterances, is stated succinctly by Osborn Elliott: ". . . the top men of U.S. industry possess the kind of drive and energy that separate the winners from the also-rans. Yet strangely enough, in a society based on the profit motive, these staunchest defenders of private profits are not themselves primarily motivated by money. Many of them, it is true, quite naturally entertain a healthy regard for the six-digit pay check. For when a man steps into a top job, his pay is likely to accelerate almost to escape velocity."

   There follows a review of some of the opulent salaries, up to Eugene Grace's $800,000 in 1956.

   "Yet," Elliott resumes, "the promise of money is not what keeps most top executives coming to the office every day. For one thing, high taxes make a raise almost meaningless. . . ."

   We have, though, already seen how that little impediment is bypassed.

   "This is certainly the way Crawford Greenewalt [of Du Pont] feels about his own pay as president of du Pont," Elliott continues. "It is a well-known fact that on Greenewalt's wedding day in 1926, his father-in-law Irénée du Pont gave him 1,000 shares of Christiana Corp., the holding company that owns gobs of du Pont stock. By 1959, Greenewalt owned 4,096 shares of du Pont common (at $250 a share) and 687 shares of Christiana common (at $17,000), for total holdings worth $13 million. Thus Greenewalt does not exactly depend on his $300,000-odd yearly salary and bonus from du Pont to keep body and soul together.

   But Greenewalt's paycheck, Elliott admits, nevertheless has at least emotional meaning to him. He would not like to work for nothing. For, Greenewalt is quoted, "Money is a symbol in the same way that a Nobel Prize is a symbol to the scientists. You can't eat a Nobel Prize. Of course, you can eat the $50,000 that goes with it, but that's not why people want to win one." ¹¹ So, this strange spectacle of elaborately large pay taken in various tax-skipping forms, does have a rational if recondite explanation. It is, we are assured, purely symbolic, analogous to a Nobel Prize in science. A slight difference is that the Nobel Prize usually comes only once, cannot be solicited and is for a modest $50,000. It carries with it no stock options, gifts or retirement pay that amounts to more in one year than the average worker makes in twenty to forty years.

    And the recipients of the pay, we are assured, are akin to scientists, but better paid.

   Lest it be thought that I dismiss the strange contention out of hand let us prayerfully consider it together. There may be some subtle point here, as in higher mathematics, which lesser mortals have difficulty in grasping. All this money is a symbolic prize apparently for rare and profound management insight exercised to keep the infinitely complex industrial system going.

   Looked at coldly, the contention in the light of all surrounding circumstances is an insult to intelligence. Comparison of year-in-year-out executive pay to the Nobel Prize compounds the insult. If the money were a mere symbol it could be hung on the wall, like a diploma. As it is, it is treasured, carefully invested, locked into the strongest vaults. If a stranger gains access to it without permission, he is liable to be shot out of hand. It is, then, more than a symbol. It is the substance, the ultimate goal.

   It is entirely possible, of course, for a man to say honestly that his salary of $300,000 or so means little to him (especially when 70 or 91 per cent of it is taxable) in the light of the fact that he has other large income steadily accruing to him in dividends, undistributed profits, retirement funds, prepaid life insurance and perhaps capital gains from cut-rate stock options. Anyone might feel this way about $300,000 in such circumstances. But that this disproves an interest in money is hardly tenable. Rather could it be interpreted more reasonably as showing an interest in money that has been so well satisfied that $300,000 additional before taxes is a trifle!

   Still, Osborn Elliott may be exactly correct in the letter of what he says, although he is certainly errant in rendering the essence. For he said, the close reader will note, that these men are not primarily motivated by the prospect of large gain. What primarily motivates any man might be difficult to say. Most men appear to be primarily motivated by a desire to continue breathing from moment to moment. But somewhere along the way the big money-makers, after primary motivations have been served, appear to be grasped by a very strong, compulsive, overriding motivation to gather in large sums of money by a variety of devious avenues.

   Careful studies of executive inter-company mobility, based on large numbers of companies, are inconclusive in showing a clear pull of money alone in the attraction of executives. This is in part because the effect of stock options, which became pervasive only after 1950, has not been fully studied and because the effect of hidden perquisites like wide-open expense accounts cannot be measured. But even though pre-1950 data do not clearly show the pull of bigger money ¹² it is agreed by observers in the field that either money or greater responsibilities and higher positions invariably associated with money are factors. ¹³

   Business Week in 1953 found that 422 job-changing executives gave the following reasons for moving: bigger job, more responsibility, 29.9 per cent; greater opportunity for future growth, 21.6 per cent; increased income, 17.8 per cent; disagreement with management policies, 16.1 per cent; discharged, 14.7 per cent; need for change of activity, 10.9 per cent; all other reasons combined, 50.9 per cent.

   As Roberts points out, on the executive circuit the first two reasons are usually associated with more money, so that in this group 69.3 per cent of the reasons given concerned money-making. The total of reasons exceeds 100 per cent because some of the men stated more than one reason. ¹⁴ "Many similar surveys have been made and, while they differ in the weight given to individual factors, they point to a complex web of motivations in which money by itself [my emphasis--F. L.] appears to be relatively unimportant, but in which money contributes to an unknown degree to the attractiveness of non-financial factors." ¹⁵

   All that this indicates, after tracing through the fine print, is that a salable executive will not ordinarily stay in a well-paid job if he is seriously humiliated, mistreated or frustrated and will not seek a better-paying job if it doesn't offer him at least as much security of treatment and status. But none of it suggests that executives are not attracted by better money offers. A man paid $100,000 net by Du Pont might not respond to an offer of $200,000 from Podunk Arms but, unless he saw better things in sight for him at Du Pont, he would almost certainly examine carefully an offer of $200,000 net from Allied Chemical or Union Carbide. He would, as everyone recognizes, owe it to his wife, his children, his mother, his pastor, his Alma Mater and the family dog to do at least this much.

   If executives were not drawn by better money offers, despite all labored statistical analyses, such offers would not be made (and often accepted) as they commonly are. The fact that all the offers are not accepted shows the weight of the old maxim: Money isn't everything.

   Yet the asserted disinterest of the high executive in money, attested to by Greenewalt of Du Pont, has achieved high academic certification, as have many other strange notions relating to wealth in the United States. Professor Daniel Bell, Columbia University sociologist, thus assures us that the new corporate men "were a special breed, often engineers, whose self-conscious task was to build a new economic form, and whose rewards were not primarily [there it is again--F. L.] money--few accumulated the large fortunes made by a Carnegie, a Rockefeller, a Harriman, or a Ford--but status achievements and, ultimately, some independent power of their own. Thus T. N. Vail, who created American Telephone and Telegraph, Elbert Gary, who became the public relations face of U.S. Steel ('He never saw a blast furnace until he died,' said Ben Stolberg once, bitterly), Alfred P. Sloan, who fashioned the decentralized structure of General Motors, Gerard Swope, who held together General Electric, Walter Teagle, who rationalized Standard Oil" are representatives of a new social upward mobility. ¹⁶ And this last may be true.

   The big corporation man here stands forth as a status achiever, not primarily interested in money. (It has never been established, one should notice, that Carnegie, Rockefeller, Harriman, Ford or any of the progenitor moguls were primarily interested in money. For my part, I should say they were not.)

   All these men--Vail, Gary, Sloan, Swope and Teagle--were agents. Behind Vail, Gary and Swope stood J. P. Morgan and Company. Behind Sloan was the Du Pont family and behind Teagle were the Rockefellers.

   The only one of these to amass a very considerable fortune, thanks to stock options and a preternaturally skyrocketing large industry, was Sloan.

   Professor Bell's thesis here is that family capitalism, once dominant, is breaking up, making way for the New Men of power, the new managers, who are very much akin to the members of Mills's power elite, although Bell has many well-taken critical reservations about Mills. Like Mills, he believes in the managerial revolution, in new coalitions of men not primarily interested in money (except as collectors) but interested in status, achievement and play with power. The power of the "ruling class" has been dissolved. Everything is in flux. ¹⁷

   That the concrete evidence shows this has not happened--at least not yet--the reader is now well aware.

   What I suggest is that the big executives, the new men, are interested in money, perhaps not primarily but prominently. I deny that ultimate power either in a company or nationally lies with the executives, unless they are also big owners.

   I don't by any means suggest that the big executives are straw men, water boys. They would be of slight use to the powers-that-be if they were. Considering what little is expected of them by their superiors they are perfectly capable. They just do not call the shots, either singly or in coalition. Their role is advisory. If, creatively, they develop large plans, these plans are subject to approval--in politics by the president and the congressional Establishment (with the concurrence of the Supreme Court) and in industry-finance by the big and few stockholders (not by the twenty million shareholders of the Stock Exchanges "People's Capitalism").

   To show that what I assert is not so, all anybody has to do is to cite a single case wherein a single executive or coalition of executives, lawyers, military men or others carried out any project whatever in government against the will of the president and Congress, and in industry-finance against the will of the big owners either directly present or always ready to step in. Berle in The Modern Corporation and Private Property shows a string of big companies under management control by one legal device or other, but a few years later the managers, who were often big owners elsewhere in the economy, were knocked out by legislation and most of the companies were also knocked out of existence, especially in public utilities,

   All this is so even though, as I am aware, there are cases of big owners who haven't the foggiest notion about anything until they consult the president of their company and their lawyer. They are completely dependent for guidance upon these far more knowledgeable men, who exercise power by proxy. In the circles of power, too, everybody knows for whom they speak. But I see no validity in looking upon such representatives of absentee power as "new men" of power. To me they look like old-fashioned agents, overseers, by no means to be disparaged. At the same time, they should not be enthroned--at least, not until after a coronation.

   The origins and backgrounds of big business leaders have been studied under the most refined academic auspices and their careers statistically traced with fine-caliper methodology. ¹⁸ We may profitably take note of some of the findings.

   Of the large sample studied for a period of twenty-five years, 52 per cent had fathers in business and 22 per cent had fathers in professions or white-collar work. Only 9 per cent had sires who were farmers, and 15 per cent laborers.

   The fathers of 8 per cent were owners of large businesses, of 15 per cent were major executives, of 18 per cent were owners of small businesses, of 8 per cent were minor executives and of 3 per cent were foremen. ¹⁹

   This finding was widely at variance with the distribution of occupations in the population as of 1920, when 47 per cent of all adult males were classified as laborers. If big business leaders had been 47 per cent the sons of laborers, the mobility rate for laborers would be 100. As it was it was only 16, while that of sons of farmers was only 40. The upward mobility rate for the sons of owners of small business was 360, of sons of professional men 350 and of sons of foremen was 133.

   Most significantly, the upward mobility rate of men whose fathers were business executives or owners of large business was 775, nearly eight times the statistical projection. The sons obviously either had friends at court or got proper coaching.

   As the University of Chicago sociologist W. Lloyd Warner sees it, the "royal road" to high executive success was higher education. Whereas in 1928 only somewhat more than 30 per cent of big business leaders had a college education, by 1952 the quota was nearly 60 per cent. In 1928 only 15 per cent had some college study but by 1952 20 per cent had at least been to college. ²⁰ Of 505 business leaders as of 1952 as many as 216 went to only 14 different colleges, and these same 14 colleges were mentioned 87 times as the ones attended secondarily, either for graduate work or in transfer. Yale, Harvard, Princeton and Cornell were named most often, with Harvard as the dominant choice for graduate work. ²¹ Very nearly a third went to Harvard and Yale as undergraduates or graduates.

   In no fewer than 62 cases the men went to a second "select" group of 10 colleges, of which Northwestern, Pennsylvania State, Stanford, Wisconsin and Western Reserve were tied for first place. ²²

   "Education has become the royal road to positions of power and prestige in American business and industry," says Warner. "That this royal road is open to all men is given ample testimony by the large number of educated men from the bottom social layers who appear in our sample." ²³

   That this royal road, so optimistically saluted, may not in fact be such is suggested by the continuing merger movement and the steady progress of computer analysis. Decision making, whatever its role in the past, is inevitably being narrowed in scope by the increasing refinement and elaboration of computers; live decision makers, whatever their role in the past, are becoming increasingly dispensable. Furthermore, the merger movement is continually reducing the number of top executive posts. Every merger, while it does not necessarily reduce the total of vice presidents and executive vice presidents, does reduce the number of chairmen and presidents. If all companies were combined into a single company there would be places for only one chairman and one president, and at most twenty-five members of the board.

   That education is not the true gateway to the "royal road" is shown by the concentration of elite schools, long the special wards of the propertied. These schools, eclipsing others, produced most executives because they were most patronized by the upper classes. In view of the fact that sons of members of the business elite, owners or big executives, were disproportionately represented and showed the highest index of upward corporate mobility, it would appear that belonging to the business in-group and the socially related professional group was a more significant factor than level or place of schooling in obtaining big-business position. Sons of owners, executives and professionals as a matter of course are more likely to go on to college, particularly to elite colleges, and after that into the higher executive posts. True, as Warner shows, men of lower social origins can and do make the grade, but in far lesser proportion than the incidence of low social origin in the population. Otherwise put, those who are already in at the beginning are more likely to be in at the final reckoning.

   The typical business leader of the 1950's was 54 years old, had been with his firm 24 years, achieved his high position 24 years after entering business and had held his job for almost 7 years. Most men began business between age 21 and 22, freely shifted jobs and companies until about 29 years old when they joined their permanent firms. Typically, the man was 45 or 46 years old when he clearly emerged as a top dog. ²⁴

   But the longer his period of schooling the quicker he made it to the top. Graduate students made the very top in 19.9 years, college graduates in 22.9 years, college dropouts in 24.5 years, high school graduates in 27.9 years, high school dropouts in 30.6 years and grade school products in 31 years. ²⁵

   So, the more schooling the successful entrants have (or the more affluent early circumstances) the quicker they make it to the top. At any rate, neither education nor in-group standing retard one in his ascent.

   In beginning occupations, 43 per cent started as clerks and salesmen, 24 per cent as professionals, only 14 per cent as skilled or unskilled laborers. "Few at any point in their careers were entrepreneurs in the sense of owning or establishing their own businesses. Also, while there have been a number of cases of men moving from top-level military positions into key positions of late, these form only a minor proportion of the total business elite." ²⁶ So much for Mills's switchovers from the military to the corporate circuits.

   The Horatio Alger hero, as Warner notes, is not very much in evidence.

   "Careers are built largely on formal education, acquisition of management skills in the white-collar hierarchy, and movement through the far-flung systems of technicians and lower-level management personnel into top management. Traces of the legendary patterns remain, and spectacular examples of the type exist; they tend to be unique." ²⁷

   Upward mobility toward the elite corporate level, Warner found, was especially marked in the area of marriage because most business leaders in all categories married above or below their levels of origin. Those of laborer origin married most frequently at their level of origin, 42 per cent; big-business people married next most frequently at their level of origin, 35 per cent. Professionals and white-collar people, exogamous at 77 and 81 per cent respectively, married most frequently outside their levels of origin, but nearly 20 per cent in both these cases married into the big-business class, took to wife a tycoon's daughter.

   When a man marries above or below level of origin--and most of all categories did--there is upward social mobility toward corporate elite status involved in marriage for the man or the woman. As the leaders all have elite status, it matters not how they got it, although women born below the elite obviously got there only through marriage. A woman is either in the elite to begin with, marries into it or marries a man who drags her along into it. ²⁸

   People who make it to the top or are born into the top are mobile in non-social ways. They are, first, geographically mobile, easily moving around the country from place to place. They are functionally mobile, readily adapting to a considerable range of jobs in which Warner detects much special educational stimulus; they are adaptable men. Those in the birth elite, however, tend to be less conspicuously geographical gadabouts.

   External signs of steadiness and "stability" were most noticeable in the birth elite. The others, at least early in their careers, were more akin to rolling stones, willing to switch jobs and locations.

   The number of men in the same firm as their fathers, compared with sons of the elite who achieve high position in other business organizations, is relatively small. There can be no doubt that each group of men was advantaged by being born to high estate. Only a few were directly aided by extra privileges and financial assistance; but the immediate factor of being born to families accorded high rank by the community provides such fortunate men with social and economic advantages, such as being in the higher levels of prestige where the powerful are, going to the "right" preparatory schools, having the right social relations and clubs and fraternities in college, and going with and courting young women of their own social set, knowing what to do and not to do (while the parvenu by trial and error is struggling to learn that there are such ways). They get a head start in life that can be overcome only by hard work, grim determination, and watchfulness of personnel offices, or the eager quest of great corporations for young men of promise. The birth elite are advantaged because their families learn "superior" values, goals, and standards by living in the subculture of an upper class. Their earliest adaptations from infancy on--nursing, weaning, cleanliness, likes and dislikes, admiration or dislike of intimate figures about them, later childhood goals and ambitions--are set within the learning maze of a "Superior" family. ²⁹

   It may be hypothesized that there are far more heart attacks among the nonelite upward strivers than in the birth elite: the Horatio Alger boys who never made it, dropped dead on the ten-yard line. I have found no studies of fatal illness in the candidates for success on the corporate ladder that compare the rate of such illness for groups of different social origin. One may surmise, however, that the man who makes it from laborer to retirement as chairman of the board has an exceptionally strong constitution. The road ahead somehow seems less rough with Scarsdale, Yale and Skull and Bones as take-off points.

   Life in the corporations, and in and around the executive suite, has been as closely studied as other phases of the executive terrain and has often been portrayed in best-selling novels and popular films. William Whyte's The Organization Man is one of the better known of the more mordant studies of the corporate bureaucracy and its foibles, and there are others. But for an impressionistic study of the headquarters office of the large finpolity there is nothing to excel Alan Harrington's Life in the Crystal Palace, written by one of its Harvardian denizens. Grimly forbidding to the Socialist, Communist and more generalized radical, the organizational generating point of human exploitation and debasement, the corporation on the inside is indeed nothing so much as a crystal palace, a place of shining light, elevated attitude and sweet benignity. "I think that our company resembles nothing so much as a private socialist system," says Harrington. ³⁰

   The whole of his book is a banteringly persuasive, penetrating embroidery on this theme.

   What Marx suggested socialism might be like after it took over an irrational capitalism from a handful of selfish owners one finds here--at the headquarters of the giant corporation. Here the byword is: From each according to his capacity without any great pressure, to each according to his needs in an ascending hierarchy of greater and greater privileges, boons and opportunities. Harsh voices are never heard in the Crystal Palace, nobody is ever bawled out, nobody is ever fired no matter how much he deserves it, everything is cushioned--benefits all around for everybody from day of employment until death.

   "A mighty fortress is our Palace; I will not want for anything. I may live my days without humiliation. I will not be fired. It nourishes my self-respect. I am led along the paths of righteousness for my own good. I am protected from tyrants. It guards me against tension and fragmentation of myself. It anoints me with benefits. Though we pass through bard times, I will be preserved. These strong walls will surely embrace all the days of my life, if I remain a corporation man forever." ³¹

   And all this applies down to the lowliest clerk and office boy of the Crystal Palace, each of whom has in hand his plan of sure benefits until retirement and beyond. Everything is bland, bland, bland . . . and genteel, subdued.

   But "As for the young man who has not gone to college, he is virtually untouchable so far as a middle-level job with a corporation is concerned. If Henry Ford were reincarnated he could never land a job at the Crystal Palace. In fact, on the technical side, an applicant will have quite a bit of selling to do if he can't produce a graduate school degree." ³²

   "I suspect," says Harrington, "that most jobs in a corporation and elsewhere can be mastered in a few months, or at any rate in a year or two. What cannot be learned that quickly is the corporation minuet--the respectful dance with the right partners. The watchful corporation man gradually finds out who is important and who is not; what is acceptable and what is not; what type of project will advance his fortunes and what is not worth bothering about. The secrets of gauging and responding to the power of others--superimposed on a normal intelligence--will move him slowly upward." ³³

   In the upshot Harrington found paradise boring. The hardest task was standing quietly on the escalator as it quietly swept one upwards toward the quiet stratosphere of quiet corporate power.

   There was one cardinal sin at the Crystal Palace, Harrington found, and it could get one into serious difficulty. This was to be without the capacity for belief in the absurd, at least for believing in believing. Not to be a true believer of some acceptable sort stamped one as dangerous. As Harrington saw it, the hierarchy of acceptable beliefs from highest to lowest was as follows:

   1. Belief in the product. "The highest and most satisfying form of commercial belief is the conviction that the product I am working for is essential, or at least helpful, to mankind. If I can't have that, I should be able to assume, at any rate, that our product is the best of its kind on the market. Lacking that, let me have faith that it is not positively the worst of its kind. Take even that away, and please assure me that it is not poisonous. Without such assurance, I will have to justify my job in another way." The product, in short, is making the world a better place, at least not worse.

   2. Belief in making money. "Money . . . measures the length and strength of my manhood. It is the skin of the dangerous leopard, the bacon from the wily pig that I bring home because I am strong, and know my way around the forest. . . . The possession of money makes men more masculine and women more feminine. Cash enlarges the soul. Money creates beauty where there was none before. It is positively erotic and can buy gaiety. When I have money I am a much nicer person, tolerant, kind and understanding, and I forgive the sins of others. . . ." Moneymakers are great people, the greatest.

   3. Belief in getting ahead. Attainment of status is the end in view here. You are what people think of you.

   4. Belief in being a "pro" in doing a job professionally well whether one likes the job or not.

   5. Belief in sheer process. "I believe in production."

   6. Belief in the company, whatever one's lack of belief in any of the foregoing. Not at the very least to believe in the company disqualifies one entirely.

   For if I am lost in the split-level values of modern business, the High Corporation will serve as my High Church. Like the church, my Crystal Palace removes the burden of belief from me. It removes my need for decision. I have found my rock. I only believe in the company.

   Like the church, our company is good and wise. In the context of business enterprise, it is the inheritor and vessel of a mighty tradition. Our company has achieved high ethics and kindness, and cares for me, and will see me through to sixty-five, and send me checks after that. Church and Palace alike are sanctuaries in the jungle of unbridled competition. At the head of the church is God. On the top floor of the Crystal Palace . . . it doesn't matter, since I will never arrive there. ³⁴

   The plush fortunes, few excepted, belong almost entirely to original owners of properties, mainly in the form of corporations, or their descendants. Leading executives, no matter how much they are paid, rarely put together overarching estates.

   The way one becomes ultra-rich on the corporate circuit is to gain an early ownership participation in a rapidly developing company (preferably unnoticed) in a new field, precisely as in the nineteenth century. The trick is to see the new field opening up or to open it up. Most nonowner executives, as we have seen, make it to the top at about forty-five years of age, with only some twenty years to go before mandatory retirement. Even if they were able to put aside as much as $1 million a year out of cash salary, stock options and participation in undistributed profits this would guarantee only $20 million prior to retirement, not a pauper's portion by any means but still not up in the imperial range of the General Motors executives between 1920 and 1960 nor in the range of the $90-million estate left by Arthur Vining Davis of Alcoa.

   In order to get into the really top money an executive must have taken his top position very early, which means that except in the case of an hereditary owner it must certainly have been a small or smallish little-known company when he took his position. Thereafter his fortunes became those of the burgeoning company; as a member of the inner family he becomes rich enough to arouse widespread envy.

   Not many big new companies have emerged since 1920. Running down the Fortune list of the first hundred industrials we find International Business Machines, North American Aviation, Boeing, Radio Corporation, General Telephone, General Dynamics, Sperry Rand, United Aircraft, Allied Chemical, Minnesota Mining and Manufacturing, McDonnell Aircraft, Olin Mathieson, Textron, Celanese, Litton Industries, Douglas Aircraft, Reynolds Metals, Grumman Aircraft and United Merchants and Manufacturers. Even some of these embrace, through mergers, properties extant before 1920; most of them, however, are representative of new technology, mainly aviation, electronics and chemicals, and have been well served by war. Some started out rather big. It is in companies such as these that early executives who remain for many years turn up with estates that are large but seldom within hailing distance of the big established fortunes multiply distributed among many family members. In this collection no fortunes have been produced to compare with the stupendous accumulations of Henry Ford and the General Motors crowd.

   A rather fruitless running debate takes place desultorily between those who assert that the American economy is so developed that nobody can any longer scrape together a big fortune and those who claim there are as many opportunities for fortune-builders as ever. That there are lush opportunities cannot be denied. But that, in view of the great increase in population and the solidly established titles of hereditary wealth, the opportunities are nearly so many as once was the case is extremely doubtful. Concentration alone limits opportunities for financial devilment by newcomers.

    While new technology does lift new men to positions of wealth, it should not be forgotten that old wealth-holders are usually careful to see that they are participants in the new technology. Thus, while the development of Polaroid made newcomer Dr. Edwin H. Land a very wealthy man--one of the few really wealthy inventors--he was in partnership with Harriman and Warburg money.

   Corporation executives are the most highly consistently paid people in the American economy. If salary is a symbol of worth, as commonly supposed, they are the most worthwhile people in American society. In general, pay for administering large properties or organizations exceeds all other types of recurrent pay. The pay of top executives even in nonprofit organizations, such as foundations and national trade unions, also tends to be high, in the range at least of $50,000 to $100,000.

   The most systematically, subtly and thoroughly trained people in the country, it will be generally agreed, are the scientists. Yet the median annual salary of 223,854 registered scientists in 1964 was only $11,000 a year, about the expense account of a middle-level salesman. ³⁵

   The highest median for highly experienced scientists was for those in the age range 50-54, where the figure was $13,400. Scientists employed in industry and business had a median salary of $12,000. In the management or administration of research and development scientists had a, median of $15,500. The median for the upper tenth of income receivers" among scientists was $18,000; for the lower tenth, $7,100. ³⁶

   The median for scientists in education, trainers of new scientists, was $9,600; in the federal government, $11,000; in other government, $9,000; in the military, $7,800; in nonprofit organizations, $12,000; and among the self-employed, $15,000. Scientists with a medical degree had a median of $15,500 compared with $12,000 for the holders of the Ph.D. ³⁷

   The highest pay as of 1965 reported for any pure scientist in the United States was $45,000 annually paid to Dr. C. N. Yang, Nobel physicist of the University of the State of New York. The highest salary reported for a non-scientist working scholar was $30,000 assigned to Dr. Arthur Schlesinger, Jr., historian formerly of Harvard and more recently with the City University of New York. ³⁸

   When Dr. Albert Einstein, one of the most fundamentally creative brains of modern times, just before World War II accepted an invitation to join the Institute for Advanced Study at Princeton, New Jersey, he was asked by Dr. Abraham Flexner, the director, to name his price. Einstein, writing that he was "flame and fire" for the position, suggested $3,000 a year. Flexner quietly set the pay at $16,000. ³⁹

   The salary of Dr. Yang would be considered barely adequate by any middle-range corporate executive. It would be a small "gift" for any legislator. It would hardly buy the gowns for one year for any one of scores of nubile heiresses who would probably have difficulty threading a needle. Einstein's salary, even by pre-World War II standards, was that of a very lower-rung man.

   If we take Dr. Yang's salary of $45,000 as an index of maximum sophisticated earning ability, it is clear as crystal that 75 per cent or more of the salaries of top corporation officials is paid for nonability factors--mainly loyalty. The salaries of scientists, academic and nonacademic, range far higher than those of college professors in general or even most college presidents, as shown in annual reports on salaries by the American Association of University Professors. Many professors as of 1967, even at what are taken as "good" schools, were paid down in the range of $7,000 and less. Most of the schools' teaching staff is paid far lower.

   Professionals in general are paid on a similar low level. The most highly paid professionals are dentists, physicians, surgeons, lawyers and judges, and their median earnings in 1959 were somewhat about $10,000 annually, according to Statistical Abstract, 1964, page 229. The medians for other professionals were far lower--$4,020 for clergymen, $4,653 for musicians and music teachers, $7,207 for college presidents, professors and instructors, $5,827 for secondary school teachers, etc. Engineers, so vital to an industrial system, had a median of $8,361.

   The reader should be reminded that the median indicates that half are paid below these levels.

   Leaving aside the factor of scientific creativity, the man in science must have precise, detailed knowledge of thousands of minute and of all-enveloping aspects of his field, within which he must be able to reason subtly, usually mathematically, and he must maintain over long periods of time steadiness of purpose even though results are meager. He is rarely buoyed up by the great "breakthroughs" alluded to so facilely by journalists. Nor can these when they occur be patented and capitalized.

   Neither in input of thought, effort, preparation or concentration is the work of any corporation executive remotely comparable. Indeed, on the basis of "inside" or friendly accounts the intellectual attainments of corporation executives appear to be slight. Fortune finds they do not do much reading, are weak in intellectual powers. ⁴⁰ Others wonder how many of them have functional reading ability at all because so many seem poorly informed, constantly need assistance from public relations men (usually ex-journalists).

   There is a great concentration of brains in a corporation. But it shows itself, not in the top executives as a rule, but in the lower-paid lawyers, engineers, scientists, market analysts and public relations men. These specialists usually work up the script for the trusted top men. When some of the executives decide to "go it alone" in public expressions of their conventional wisdom, one gets derisive reverberations, as in the case of Charles E. Wilson's what's-good-for-General Motors homily to Congress. Speaking out on his own, the top corporation man often sounds like a goof, a super-Babbitt, and the lower professionals in his company writhe uncomfortably. Indeed, in some companies the professional staff is under standing instructions to keep the top man so "boxed in" and isolated that he cannot put his foot in his mouth in public, cannot deliver himself of dazzling shafts of cracker-barrel wisdom.

   It is sometimes argued that it is the vast concentrated responsibilities of the top corporate men that make them worth their pay; responsibilities of scientists and teachers, although not denied, are held to be more diffuse, less immediately decisive. Top military officers, however, certainly have organizational responsibilities that transcend those of any corporate officials. Their moment-to-moment decisions involve far more men, equipment, money and organizational niceties as well as the very safety of the nation. This is especially so in time of war.

   Yet the Chief of Staff as of 1966 drew a maximum base pay of $2,140 a month or $25,680 per year. The men serving as Chairman of the Joint Chiefs of Staff, Chief of Staff of the Army, Chief of Naval Operations, Chief of Staff of the Air Force or Commandant of the Marine Corps receive basic pay for the grade of $2,019.30 per month regardless of cumulative years of service. A Chief of Staff or Chief of Naval Operations also draws $4,000 per year in personal money allowance. A four-star general or an admiral gets $2,000 a year in money allowance and a maximum annual salary of $17,796. Corporately speaking, all this is taxable chicken feed.

   When we ascend to the ineffable level of the Commander in Chief himself, the president of the United States, we find the salary is $100,000 a year and fully taxable. There is also a taxable expense allowance of $50,000 for officially connected duties and a nontaxable annual travel allowance of $40,000. Living quarters are also provided and an alert president can latch on to many free rides and free lunches. There now goes with the job a lifetime pension of $25,000 a year, $10,000 annually for presidential widows and up $50,000 a year (plus free mailing privileges) for the office help of ex-presidents. The maximum time a man may enjoy this comparatively modest salary and expense account is ten years.

   Owing to the tax bite the in-pocket effectiveness of both the salary and the nontravel expense account is reduced by more than 50 per cent. For a, president like Lyndon B. Johnson, who was thriftily able to build up from hard-pan poverty an estate of some $13 million or more on his salary as a congressman, there was no particular problem involved. And for a big inheritor like President John F. Kennedy there was no problem.

   This office carries with it vast responsibilities. Yet there is probably no president or chairman of any one of 750 or more of the largest corporations who is not paid far more. So much for responsibilities and the emoluments therefor.

   The corporate executive, as I said, is no wizard. He is paid as he is because he is in a position to do much harm to big property holders. There is a further nuance that should perhaps be noticed. A big stockholder, everything else apart, wants his chief executives to feel identified as closely as possible with him. Hence he sees to it that their take-home pay is as close to $1 million a year as possible. He knows their expense account is phoney because he probably set it up himself and knows there is no such legitimate expense involved. It is all readily explainable as serving to keep up appearances.

   The executives at various times must entertain foreign notables, public officials or other wealthy men. It would hardly do for them to entertain in meager surroundings. The residences of the top executives should say at a glance: The Super-Cosmos Corporation is an extremely rich and powerful entity, to be treated respectfully. Again, big executives must make political campaign-fund contributions.

   No implication is here intended that executives, considering all circumstances, should really be paid less. They are paid by people who seldom overpay, who pay only what they feel they must pay in every situation. All I intend to say is that, despite all the ballyhoo about esoteric executive skill to cover up what the pay is really for, the executives are not paragons, are not superior people--superior to scientists, high military officers and pubpols--to the degree that their compensation might suggest. They are basically politicians, with all the popular connotations of the term. They are paid as they are to guarantee proper performance by people who are anxious about that performance.

   The comparatively astronomic pay of corporate executives as stand-in overseers of large properties and manipulators of large numbers of employees, consumers and common citizens is shown in still another perspective when compared with the compensation, before taxes, of the entire American labor force. Here the pay of at least some scientists begins to look pretty good, although at least half the scientists are paid on the level of the lower labor force.

   The following chart-profile of family income in the United States from 1947 to 1964 in 1964 dollars is taken from Current Population Reports: Consumer Income of the United States Department of Commerce, issued September 24, 1965.

   About 20 per cent of families as of 1964 had incomes above $10,000 a year. While only 10 per cent of individual incomes exceeded $10,000, with only 1 per cent exceeding $25,000, substantial family participation in plus-$10,000 income stems from the fact that some persons hold two jobs, some families have two or more wage earners and many families in this bracket own property. Nevertheless, 80 per cent of the families shown on this chart had incomes below $10,000, mostly from wages, no matter how many earners they had. From somewhat more than a quarter in the income-group under $3,000 in 1947 the families in this range by 1964 were slightly less than 20 per cent in dollars of 1964 value.

   The United States is usually alluded to in the corporate press as a country of large incomes, high wages. And so it is in comparison with nonindustrial countries where incomes are very low. But in relation to the incomes of corporate executives and the owners of large inherited properties, and to American tax- padded price levels, Americans draw coolie pay. A few weeks out of a job and most of them are stony broke, on the relief rolls.

   The careful reader should not suppose that the reference to "coolie pay" is hyperbolic.

   Per capita "real" income from all sources in the United States in the first quarter of 1966--that is, income after personal taxes and in terms of the dollar stabilized at 1958 prices--was at an annual rate of $2,260, up from $1,900 in the first quarter of 1960 and from $1,831 in 1958. In terms of the 1966 dollar the rate was $2,490, showing an inflation of $230 or about 10 per cent over the "real" rate. ⁴¹

   These figures, of course, are averages, applicable to every man, woman and child. In order to have the latest figure applicable to members of his family, a married man with three children in 1966 would have required an income of $12,450, after taxes, in current dollars, which would yield a "real" income of $11,300 in 1958 dollars. If such was his income, though, he would have been well up among the upper 10 per cent of income receivers.

   Owing to the very great incomes received by 1 per cent and less of the population, mostly from investments, the actual participation of some 90 per cent of the population in "real" income takes place at levels ranging far below the stated average of $2,260 per person.

   Single persons who received from $2,490 and upward in 1966 after taxes were, of course, at or above the average. But a married man with a nonworking wife would have had to receive twice this much to be at the average and would need $2,490 of income in current dollars, always after personal taxes, for each of his children in order for them all to be at the average. Few persons participate at the "average" level!

   This bedrock figure computed by the government, moreover, does not allow for the substantial taxes incorporated in prices.

   In order to show the splendor of American workers' incomes it is often shown how much longer one must work in Russia for a loaf of bread, a pair of shoes, a bottle of milk, etc. What is shown is true specifically, but misleading. For some costs in Russia, such as of available housing, are less. Again, many services are provided at no direct cost. In Russia and throughout Europe, no college tuition is charged and a variety of services, costly in the United States, are provided at low cost.

   The median figure on real income would necessarily be much lower than this average, for the lower half necessarily includes many with zero income--the publicly institutionalized sick and delinquent. There are also the low-paid seasonal agricultural workers, the unemployed and the only occasionally employed.

   Total income in the United States is, of course, great--the greatest in the world. But popular participation in this vast income ranges from zero to very little for substantially more than half of the populace. Most literate people, however, believe just the opposite is true, a tribute to the power of propaganda and statistical manipulation.

   In the 1930's large sectors of the population suffered from deflation. In the 1950's and 1960's large sectors are suffering from inflation as well as elevated taxes. In terms of income most people are being "whipsawed."

   What inflation over the long term has done to income is shown in a 1966 study by the conservative National Industrial Conference Board. According to this study, a man with a wife and two children today must receive $13,324 annually to buy the same amount of goods he could get for $5,000 in 1939. The man who received $10,000 in 1939 must now receive $27,288 to match that year's buying power and the man who received $100,000 in 1939 must now get $307,734 to have the equivalent buying power. The Conference Board concluded that a very large part of the fivefold rise in per-capita income has been eroded by taxes and price inflation. ⁴²

   The family-income chart, too, is misleading if it is taken as a guide to absolute income. For these figures are stated before taxes. It should always be remembered that as labor productivity has risen through the application of technology, as real wages have risen, there has gradually been shifted onto the labor force, especially since 1940, the high income taxes originally designed for large income receivers, as well as new sales taxes. In Chapter Nine we saw some (a small part) of the ways in which taxes for the warfare-welfare state have been largely shifted onto the working population, scientists and professionals of all kinds included. We also saw to what extent large receivers of income, salaried and investment, have managed to place themselves like Bourbon favorites in the tax-exempt class.

   Yet, despite high pay, all is not well along the corporate chain of command. Owing to tensions, stress and, no doubt, the failure to extract a sense of meaning out of repetitious, essentially routine tasks such as the manufacture and distribution of soap, many executive egos are in constant danger of collapsing, and they need to be reinforced by heroic corporate measures. Obtaining little ego support from any solid achievement, they need constant emergency support.

   According to Dr. Robert Turfboer, psychiatrist with the Yale University School of Medicine and consultant to several large corporations, "an executive must have emotional security like anyone else. Evidences of eminence, far beyond financial reward, help give him that sense of security. The president of a company can be as fearful of failure as the office boy or assistant sales manager is of being fired."

   Sagging executive egos are bolstered in two ways apart from money, says Dr. Turfboer: by special privileges and by special status symbols (although there are grave dangers in the utilization of the wrong status symbols).

   Special privileges are of the following order: a $10,000 sauna in the executive suite of a new mid-Manhattan building for the sole benefit of the president and a few other top-echelon wizards; an $8,000 billiard room in the executive suite of another large corporation; in the Chase Manhattan Bank building $510,000 worth of fine art for private executive offices and executive reception rooms and, in general, office massage tables, office barber chairs, executive dining rooms, telephonic company automobiles (so that the great man need never be out of touch for an instant with GHQ), private executive planes, ultra-modern office furniture and plenty of service flunkies. There is, too, the expense account.

   "Just as a king needs a crown for people to know he is a king, so an executive often needs the first-class symbols for his position as well as his self-esteem," says Dr. Turfboer.

   How status symbols and special privileges are to be apportioned within the executive group is a problem; it is solved in accordance with an executive's putative importance. His importance is judged according to a criterion laid down by Dr. Elliott Jaques, British psychiatrist, who says, "The level of employment work can be measured in terms of the time span of discretion authorized and expected without review of that discretion by a superior." Otherwise put, the more a man can be trusted to be on his own the more important he is. Thus, the corporation president need not report to his board for six months--very important. All who have to report to somebody once a month, once a week, once or more a day are obviously progressively less important. People under constant surveillance are of no hierarchic importance at all.

   "Status symbols, therefore says Dr. Turfboer, "should be assigned or permitted according to a man's 'time span of discretion.'" The more discretion, the more costly the symbol. A company limousine costing $50 an hour should not, it is evident, be assigned to an office boy--or even to a junior vice president. Such a gadget can only be for Mr. Big himself.

   Dr. Turfboer then goes into some subtle points of higher corporatology: how to distinguish at a glance among the guardians of big property. In the hierarchy of the average establishment, the third or lowest grade of vice president may be distinguished by Venetian office blinds and absence of carpeting. The second echelon generally merits wall-to-wall carpeting (at $14 a yard) and draperies or curtains to the sill. For top executives, there are floor-to-ceiling draperies and carpeting at $17 a yard. As Vance Packard has pointed out, a mahogany desk outranks walnut, walnut outranks oak or metal. The man entitled to carpeting is likely to display a water carafe, which long ago displaced the brass spittoon as a symbol of flag rank. At one broadcasting company, only secretaries of executives above a certain specific level of advancement are entitled to electric typewriters.

   What really determines the cost and number of status symbols is "the number of people an executive affects and the intensity with which he affects them," the doctor assures us.

   But there are dangers in flaunting status symbols around indiscriminately, the doctor warns. "I refer to flashy office furniture and gold faucets, teak countertops, and Picassos in executive washrooms. The nonintellectual who displays books with fancy leather bindings, or the executive who hangs collectible art but does not appreciate what he has, may be marked as a fraud. A too-gadgety bar (except behind a sliding panel) should not be accepted as a proper status symbol. . . .

   "The wrong kind of authoritative emblems can have negative consequences. In subordinates, they may inspire envy or ridicule. While an executive may make himself often inaccessible to subordinates as a symbol of his importance rationalized by his need for privacy, needless exclusiveness can arouse antagonism within his organization."

   Symbols are assigned or self-selected, and in both cases there are grave dangers. A minor executive, for example, may acquire a desk set exactly like the one used by the chairman of the board, which "may be permissible, but it may also turn out to be poor strategy." Will the chairman, one wonders, feel burned up?

   As to assignment of symbols, Dr. Turfboer cites the sad case of a marketing executive given a much larger and more palatial office; yet the man had the effrontery to say he felt uncomfortable in his new deluxe surroundings. "Evidently," says Dr. Turfboer, "his self-esteem had not had a chance to rise to the level of the symbol bestowed on him."

   Offhand, a strictly part-time curbstone psychologist would assume that the man had very little self-esteem to begin with if it depended on anything so contrived as an office and its furbishings. ⁴³

   All is not well, as it is readily seen, along the corporate chain of executive command. Many of the men have doubts--about their worth, their importance, the value of their presence, their identities in the scheme of things, perhaps even about their potency. They need to be bolstered in a world of basic achievers, such as scientists.

   Another study, however, finds top executives to be "Basically sound, above-average in effective intelligence. These men deal best with practical or tangible data in relation to problem-solving situations. They are as a group only fair conceptual thinkers. They do not do too well in dealing with theoretical, abstract or conceptual thoughts or ideas."

   As students they had above-average grades and were in the upper 25 per cent of their class at college, although not all were college graduates.

   Most of them had engaged in some form of commercial venture before age fifteen and they are "Generally not socially aggressive. None were 'big men on campus' although some held fraternity offices. However, they were as a group somewhat lacking in the degree to which they participated in traditional student activities."

   Most of them married late, had children, and their wives played little noticeable role in their business affairs.

   One fact applied to all: None came from poverty-stricken backgrounds. In other words, none was a poor boy who "made good."

   These findings were made by Dr. Louis F. Hackemann, president of Hackemann & Associates, an international management consulting company with headquarters in San Francisco. ⁴⁴

   Professor Mabel Newcomer, near the conclusion of a study based upon a very large number of cases--882--of top executive officers, says:

   "Although he [the typical executive of 1950] has specialized training, he has never practiced independently, nor has he at any time run a business of his own as his father did. He is a business administrator--a bureaucrat--with little job experience outside his own corporation. His investments in 'his' company are nominal, in terms of potential control--less than 0.1 per cent of the total stock outstanding. He is a Republican in politics; he attends the Episcopalian church, if he attends church at all; and he served the federal government in an advisory capacity during the war. He was, in 1950, sixty-one years of age, and he will probably be seventy when he retires." ⁴⁵

   Of note here, direct verification in a study of the top executives themselves of what has been indicated before, is that the corporate executive is not ordinarily much of an owner. He is a hired man, the tool of big owners, never the servant of myriad small stockholders as in the fable of "People's Capitalism."

    Professor Newcomer makes the important point that corporations rarely comb the field looking for what would objectively be considered the best or most capable man for the top job. Why, in other words, do they "promote from within so frequently? And why do they promote so late? The reasons appear to be first, that the talent within the company is better known, and to that extent safer [nota bene--F. L.], than outside talent. Also, there is always a feeling that one's own company is different and that intimate knowledge of its problems is important from the start. The president or chairman is likely to select his successor in advance and to groom him personally for the job. And loyalty to the company is stressed. Moreover, there is a sense of obligation to the officers with whom the chief has worked, and a conviction--which is doubtless justified--that morale will be higher and the chance of retaining able executives greater, if they are aware that the top offices will be filled from within." ⁴⁶

   To attempt anything like a complete survey of the executive and his sphere would be impossible short of encyclopedic format. Under the rubric Management the central reference room of the New York Public Library indexes nearly 4,000 volumes; under Executives, nearly 400. There is, too, some score of periodicals devoted to the topic.

   So it is clear that the subject of management is a large one in a postulated democratic society where the individual is pretty much supposed to manage himself. Americans, in fact, are under constant political and economic management manipulation.

   While many of the works on management are serious analytical and descriptive studies, the executive mystique, tending to show the superlative worth of the executive and his technique as such, occupies much attention. Management of property itself, it turns out, is an arcane science, worthy of graduate study in the universities.

   For those who want a compressed view of the field there might be recommended the Reading Course in Executive Technique, published in eight volumes with many authors by Funk and Wagnalls Company, New York, 1948. The volumes are given a lengthy introduction, "Modern Executive Techniques," by the editor, Carl Heyel, who is president of Executive Techniques, Inc.

   The books in this course are titled: Systematic Solution of Management Problems (how to think, operations control, management controls, manual of organization, use of statistics, charting the course); Human Relations (employee morale, employee suggestion systems, supervising women, hints on psychology, human relations in industry); Personnel and Industrial Relations; Creative Training Programs; Manufacturing Control; Distribution; Financial Control and General Office Management; and Public Relations. Thus armed, the aspiring executive can take over with confidence.

   Management, it turns out, consists of a melange of many things, a smattering from many disciplines that turns into an ad hoc empiricism resembling a pseudo-science.

   Much of the literature in management can be reduced to cautionary injunctions, applicable generally or in various specific situations to "Always do this," "Never do that," "Usually do this," "Usually do that," "Be very careful in doing this," etc. Concrete situations are cited from experience, sometimes careful observational studies such as those of Elton Mayo on how most easily to get maximum output from a work force. Taking all the injunctions together one is given what some writers term a "philosophy of management." Troublemakers, so much sand in the gears, are especially unwanted and the place to spot them is at the personnel office, where the latest in psychological testing is put to use. Potential nonbelievers, doubters, scoffers, misfits and persons with "negative attitudes" generally must be weeded out lest they contaminate a basically sound work force and impede the smooth flow of profits.

   Critics from time to time commiserate with the bureaucratic aspirant in the Leninist countries who must, before he arrives at the top, read the metaphysical works of Marx, Engels, Lenin, Stalin and many lesser dialecticians. The American executive, however, to judge by the tomes he must read, is much worse off. For most of these writings are at best stodgy, usually turgid. And beckoning the American is no future society of shining mirages but, at most, an office with wall-to-wall carpeting, a gold key to the executive washroom and membership in a country club.

   Not only are there special periodicals devoted to the executive and his sphere, but magazines of more general appeal do not overlook him. Fortune rarely lets a month slip by without at least one article on executives, of which a few since 1950 have been: "The Case of Charles Luckman," "The Nine Hundred," "Boards of Directors," "Do Stock Options Pay?" "How Hard Do Executives Work?" "Can Executives Be Taught to Think?" "How Executives Get Jobs," "Is There an Executive Face?" "The Executive Bonus," "Are Executives Paid Enough?" "How Executives Invest Their Money,"' "How Top Executives Live," "The Executive Crack-Up," "How Much Is an Executive Worth?" "Young Executive in Manhattan," "Executive Qualities," "Life in Bloomfield Hills," "The Pirates of Management," "Those American Managers Don't Impress Europe, "Executive Compensation: The New Wave," "How to Pay Executives," etc.

   In "Those American Managers Don't Impress Europe" (Fortune, December, 1964) we were given a story of disillusion. American companies entering the European market, either by merger or establishing new plants, necessarily sent along American executives. Keyed by all the hoop-la from the American corporate press about high-powered, lynx-eyed American executives, Europeans proceeded to pay very close attention. Now, they apparently thought, they were going to see the very soul of American puissance in action. Alas, it was once again the story of mighty Casey at the bat. For the American wizards were found to be very so-so, nothing remarkable. After watching them Europeans felt reassured.

   It might be argued that the Americans did not send their first team to play in a strictly bush league, and this was probably true. To see the varsity all-stars in action the backward Europeans will have to come to the United States. Once they glimpse the Picassos in the executive washroom they will know they are in the very uterus of the big time, at the altar of the executive mystique. Now they will see how big, really big, decisions are made . . .